How to end poverty and create economic justice.

By Fred E. Foldvary

The main cause of poverty is government policy that takes away wages from workers and pumps up housing costs with subsidies to landlords. Raise wages and lower housing costs by shifting the source of public revenue from wages and profits to land rent.

Policy today mostly just treats the effects of problems, such as by providing welfare and subsidies. Major party candidates mostly advocate more treatments and subsidies. But since the cause of the problem is not eliminated, the problems can get worse, and the subsidies more expensive.

What is the main cause of poverty? It is a low wage caused by tax policy. Income and sales taxes force workers to give up about half their wages. Even the working poor pay taxes on income, sales, and indirectly though taxes passed on to them by business and property owners. Wage taxes deprive the poor of the ability to save money, often forcing them to borrow at high interest rates.

Subsidies don't cure the poverty problem. Even with billions of dollars of subsidies, poverty is still with us, and the subsidies come from taxes on workers, making them poorer! We need to instead eliminate all taxes on wages.

Income and sales taxes also reduce incentives to produce and invest, and make it difficult to own a small business.

Let's abolish all taxes on wages, sales, profits, and produced property. Public revenue should instead come from pollution charges and the rental value of natural resources.

A tax on pollution is not a true tax but compensation by polluters for the damage they do.

Land values are either created by nature or by public works such as streets, parks, schools, and security. Using land rent for public revenue does not hurt production, because the land is already there, and the rent is there no matter who gets it. Landlords cannot pass a rent charge to tenants, since the supply and demand for land is not affected by the tax, unlike taxes on good or labor.

If public services are provided by private enterprise, then the rental charges are paid to the private providers, such as shopping centers, hotels, and condominiums.

So long as government provides the works, they increase land values and land rent, so using the rent to finance them just takes back value provided by government.

If instead taxes on wages are used to finance government, this is a subsidy to landowners, pumping up their rent. Tenants must then pay twice for civic works, once with rent and again with taxes! Ouch!

Shift taxes from wages to rent. Then we only pay once, and landlords are not subsidized. With much higher wages, untaxed workers can then afford housing and medical care. And there are no more tax audits and forms to fill out.

If you favor reducing poverty and increasing wages by shifting public finance from wages to rent, vote for Foldvary for Congress. Send them a message: we don't need any more stinkin' taxes on our wages!